TRUMP IMPOSES TARIFFS ON MEXICO, CHINA, CANADA: HIGHER PRICES COMING; COUNTRIES VOW TO RETALIATE

By Alicia Wallace and Elizabeth Buchwald

CNN – On Saturday, President Donald Trump made good on his promise to impose steep tariffs on America’s three largest trading partners — Canada, China and Mexico — citing a national emergency on the flow of fentanyl and undocumented immigrants into the United States.

The action, which is expected to take effect on Tuesday, includes a 25 percent duty on all imports from Mexico and most goods from Canada (there’s a 10 percent carve-out for energy-related items such as crude oil), and an additional 10 percent tariff on Chinese goods imported into the United States.

Trump has used and promised to employ tariffs for three primary purposes: to raise revenue, to bring trade into balance and to bring rival countries to the negotiating table.

(Canada responded hours later with retaliatory tariffs of its own, while Mexico said it was also planning to issue tariffs on the U.S. as well. Trudeau announced in a news conference Saturday night that Canada would retaliate by placing 25 percent tariffs "against $155 billion worth of American goods," with the first set of tariffs taking effect Tuesday.

"This will include immediate tariffs on $30 billion worth of goods as of Tuesday, followed by further tariffs on $125 billion worth of American products in 21 days' time to allow Canadian companies and supply chains to seek to find alternatives," Trudeau said.

And in a statement posted to social media, Mexican President Claudia Sheinbaum said she instructed her economic secretary to put together a response that included both retaliatory tariffs and other measures "in defense of Mexico's interests."

"We categorically reject the defamatory claims made by the White House accusing the Government of Mexico of having alliances with criminal organizations, as well as any attempts to interfere in our territory," Sheinbaum wrote.

China's commerce secretary said that China would challenge the tariffs through the World Trade Organization, according to Reuters, claiming that the move "seriously violates" WTO rules.)

Tractor trailers wait in line at the Ysleta-Zaragoza International Bridge port of entry on the US-Mexico border in Juarez, Chihuahua state, Mexico, on December 20, 2024. David Peinado/Bloomberg/Getty Images

However, economists warn that these moves negatively impact American businesses and consumers, many of whom are still reeling from the sharp rise in inflation in recent years.

The US Chamber of Commerce warned Saturday that tariffs won’t solve the yearslong issues at the borders and instead threaten to “upend supply chains” and raise prices for American families.

“Consumers are going to be clearly worse off,” Sung Won Sohn, professor of finance and economics at Loyola Marymount University and chief economist at SS Economics, told CNN on Saturday.

“When you talk about a tariff, it’s an economic war; and in war, everybody loses,” he added. “But hopefully we will come to some better results and conclusions as a result of the pain and suffering that we will go through.”

About one-third of US imports come from the three countries Trump targeted Saturday. Their products are among some of the most commonplace and critical items used by Americans, including fruits and vegetables, meat, gas, automobiles, electronics, toys, clothing, lumber, and beer and spirits.

Food.

Mexico and Canada supply a significant share of several key food categories. For example, Mexico is the largest supplier of fruit and vegetables to the US, while Canada leads in exports of grain, livestock and meats, poultry and more.

Agricultural products from Mexico and Canada, in particular, could become more expensive for consumers, as grocery retailers operate on thinner profit margins than most industries. With little room to absorb higher tariff costs, the grocers may have to pass them on to shoppers.

Although the US typically exports more agricultural goods than it imports, the value of imports has increased faster than that of exports in the past decade according to the U.S. Department of Agriculture. Additionally, climate change has increased U.S. reliance on countries like Mexico, where growing conditions are more favorable.

Last year, the US imported $46 billion of agricultural products from Mexico, according to USDA data. That includes $8.3 billion worth of fresh vegetables, $5.9 billion of beer and $5 billion of distilled spirits.

But the biggest category of agricultural imports from Mexico last year was fresh fruits, of which the US imported $9 billion worth, with avocados accounting for $3.1 billion of that total.

Fuel and energy

The US imported $97 billion worth of oil and gas from Canada last year, that country’s top export to the US. The US has become more reliant on Canadian oil since the expansion of Canada’s Trans Mountain pipeline, according to data from the US Energy Information Administration.

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